Tuesday, December 31, 2019

Grain prices gained marginally over the course of 2019. The markets were relatively flat most of the year. Corn had a $1.29 range, while soybeans fluctuated 1.65 from low to high and wheat had a $1.42 range.

Almost the entire range was made starting in mid-May. However, the rally was short-lived, as it topped out by mid-June, and prices retreated back close to the May lows again, before a slight recovery in December.

The rally was because of a backward spring, especially in the eastern corn belt, including Ontario. Planting of corn and soybeans was seriously delayed because of the wet conditions that persisted well into June.

Not a lot of grain was sold in Ontario during the rally for good reason. Many farmers had very little planted when the rally topped out in mid-June. A lot of what was planted was in less than ideal conditions.

Then some areas missed key rains in July and August. Yields in those areas ended well below last year and normal. Stats Canada said the Ont corn yield fell 4.6 percent to 158.4 bu/ac., while soybeans fell 7.3 bu/ac to 44.1. Higher acres were reported for both crops.

In the US, the corn yield was put at 167 bu/ac, down 9.4 from last year. Their soybean yield was put at 46.9 bu., compared to 50.6 the previous year. This is allowing carry outs to fall, especially in soybeans, but the absolute numbers remain on the high side.

USDA will report final crop numbers on Jan 10. Many expect a friendly report, with a lot of corn still out in fields in the Northern Plains. However, trying to second guess USDA can be a costly exercise.

Ontario basis levels have been higher than normal. This is because our prices follow the basis in the eastern US grain belt. The basis there is much higher than in the western part of their main growing areas. The Canadian dollar only had a 3 cent range in 2019 and finished at its high for the year.

The other big issue in 2019 was the trade negotiations between the US and China. Some progress was made in December, which was probably the main reason prices ended the year well off their lows. Weather in South America over the next 2 months will dictate price direction.

2019 was a trying year for many in agriculture. However, it must be kept in perspective. 2019 is also the end of a decade. Ten years ago the world was just beginning to recover from the economic meltdown. Investors have been rewarded with the TSX up another 23 percent this year.

Agriculture has also been blessed over the past decade. Record yields were hit many times. Prices could have perhaps been better, but overall were decent with the higher yields. Farmland appreciated dramatically over the past 10 years, so everyone is much better off.

I wish my readers all the best for the New Year and predict 2020 will be better than 2019 was!